But maybe producing junky, cheap clothing is the bigger issue here.
H&M’s struggles have deepened as it deals with growing heaps of unsold clothing. The fast fashion giant has announced it is increasing markdowns in the second quarter of 2018 in an effort to sell garments worth more than $4 billion. Markdowns are not common at this time of year, and H&M said that it expects these markdowns to be higher than the corresponding period in 2017.
The reason for the clothing glut, H&M claims, is the unpredictable weather. Last autumn was unseasonably warm, which meant many of its cold-weather items didn’t move as quickly as planned. Then January started out warm in Europe, followed by a bitter cold snap in February, just as spring trends were appearing in stores. March has continued to be cold. Skimpy jumpsuits are not what people want to buy, and this had the effect of “whipsawing the retail industry,” according to Bloomberg.
H&M has been in trouble for a while now, with stores closing and sales dropping 14 percent overall last year. Stock has slumped to its lowest level since 2005. As I wrote last month, “The slowdown is attributed in part to fewer customers visiting brick-and-mortar locations. Online shopping is on the rise, and H&M has not been as effective as other fast fashion retailers at capturing online sales.”
CEO Karl-Johan Persson said, “We haven’t improved fast enough. We’re working hard to fix that.” His plan includes focusing on online sales and catching up to fast fashion rivals Zara and Primark, which embraced e-commerce earlier and more effectively than H&M did. H&M hopes to have e-commerce available in all its markets by 2020.